Pros & Cons of a First Time Homebuyers Program (2024)

FAQs

What are the negatives of first time buyers? ›

Con: First-time buyers can sometimes have funding issues

Buying a property for the first time is exciting, but it also requires a lot of money. For first-time buyers, many are metaphorically scraping together the pennies to buy their first home and so funding issues can sometimes crop up.

Closing May Take Longer

Closing on a home takes, on average, about 50 days. Getting down payment assistance can complicate the process. You may have to wait for the down payment assistance to come in, for underwriting on a second loan, or for your lender to do additional underwriting on your loan application.

First-time homebuyers often qualify for special benefits, such as lower minimum down payments, special grants, and assistance with paying closing costs, that are sponsored by state and federal governments. Many lenders offer first-time homebuyers incentives and special loans.

Their most common regret: buying a home that requires too much maintenance. Twenty-eight percent of home buyers say they were shocked at the cost and time needed to maintain their property. About one-third placed the blame on the seller for not being upfront about how much maintenance the home required.

With so many steps involved, it's easy for first-time home buyers to make some mistakes. From not saving enough money to not paying enough attention to credit, to simply waiting too long to make an offer, home buying mistakes can seriously impact an otherwise exciting time in your life.

Conventional 97 Mortgage Loan

A conventional 97 mortgage is a type of conventional loan that helps first-time home buyers finance a single-family home with a low down payment. A conventional 97 loan lets eligible home buyers borrow up to 97% of the home's value with a down payment as low as 3%.

The report also found that the biggest challenge for first-time buyers is affordability, including both affording the cost of buying a home and the cost of owning a home. The sizeable deposit generally required to get on the property ladder has been a barrier to homeownership "for some time".

Why is 0 down payment bad? ›

You might pay a higher interest rate for a no- or low-money down loan. That's because with less money tied up in the home, a mortgage lender might view you as more of a risk. Of course, the higher your interest rate, the more you'll pay overall. You'll need a bigger mortgage.

Biding time to save for larger down payments can invite other risks as well. One such risk is the prospect of rates going up. Just like waiting too long in line for a hot new restaurant, you might end up paying more if interest rates rise while you're saving.

FHA Loans. A Federal Housing Administration (FHA) mortgage is one of the best loan options for a first-time homebuyer. It has few eligibility requirements and they're all easy to meet, meaning it offers many Americans the chance to take advantage of its benefits.

But is there a right age when these factors should be in place? Are these the factors Americans should consider when deciding to become a homeowner for the first time? In 2022, the average age of first-time homebuyers was 36, according to the National Association of Realtors (NAR). This is up from 33 in 2021.

As a first-time buyer, you are entitled to stamp duty relief when you purchase a property. As of September 2022, first-time buyers don't have to pay any stamp duty for properties with a value of £425,000 or less. If the property is valued between £425,000 and £625,000, you will be required to pay 5% on the remainder.

High Home Prices: Across many regions, home prices have surged, outpacing income growth and making it difficult for first-time buyers to enter the market. Affordability concerns arise as potential buyers struggle to find properties within their budget range.

As a first-time buyer, you are entitled to stamp duty relief when you purchase a property. As of September 2022, first-time buyers don't have to pay any stamp duty for properties with a value of £425,000 or less. If the property is valued between £425,000 and £625,000, you will be required to pay 5% on the remainder.

If you've owned a property in the past, then HMRC will know you are not a first-time buyer because there will be a record of you being a homeowner previously.